IFRS Interpretations Committee

ProjectsWork plan for IFRSImpairment of Assets: Accounting for impairment testing of goodwill when non-controlling interests are recognised

Impairment of Assets: Accounting for impairment testing of goodwill when non-controlling interests are recognised

IFRS Interpretations Committee Agenda Decision

IAS 36 Impairment of Assets: Accounting for impairment testing of goodwill when non-controlling interests are recognised

Request for guidance on how an entity accounts for impairment testing of goodwill when non-controlling interest (NCI) is recognised

The submitter asked the Interpretations Committee to consider whether to propose an amendment to the guidance in IAS 36 as part of Annual Improvements to clarify requirements relating to:

calculating the 'gross up' of the carrying amount of goodwill when partial goodwill is recognised because NCI is measured on a proportionate share basis;

allocation of impairment losses between the parent and NCI; and

reallocation of goodwill between NCI and controlling interests after a change in a parent's ownership interest in a subsidiary that does not result in a loss of control.

Each of these issues arises in one or more of the following situations:

both NCI, measured on a proportionate share, rather than fair value basis, and non-present ownership interests ('NPOI') exist; or

goodwill is allocated between the parent and NCI on a basis that is disproportionate to the percentage of equity owned by the parent and the NCI shareholders (eg because of the existence of a control premium); or

there are subsequent changes in ownership between the parent and NCI shareholders, but the parent maintains control.

The Committee decided not to propose an amendment to address these issues, because of concerns relating to possible unintended consequences of making any changes, and recommended that the Board should consider the implication of these issues as part of the IFRS 3 post-implementation review.